The effect of Revaluation "Year 2 of 5"
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In Fiscal Year 2010, the Mill Rate decreased in large part to property revaluation, which is mandated by state law every five years. Windsor’s revaluation showed that property values had on average increased from October 2003 to October 2008, so the Mill Rate could be lowered and still produce the needed revenue. To help residents with the financial impact of revaluation, in FY 2010 the town council implemented a five-year phase-in of the increase in assessments that resulted from revaluation. Here’s an example, but two definitions first: Mill Rate – One “mill” produces one dollar of tax for each $1,000 of property valuation. Assessed Valuation – Set by statute as 70% of current fair market value The fair market value on your home in 2008 was $200,000. Its assessment was 70% of that or $140,000 and the Mill Rate was 29.30. Your taxes that year were $4,120. The following year, after revaluation, your home had a fair market value of $260,000 and an assessed valuation for tax purposes of 70% of that or $182,000. Your tax would be calculated at a Mill Rate of 25.98, the Mill Rate before phase-in was adopted. The resulting bill would be $4,728.36. Phase-in spreads the increase in valuation of $42,000 evenly over five years ($8,400 per year) Year 1 phase-in valuation (has already occurred) - $140,000 plus $8,400 = $148,400 In year 1, the tax would be $4,205.66 with phase-in instead of $4,728.36 without it. It isn't possible to calculate the tax for years 2 through 5 in this example because the town council sets the Mill Rate each year based on the town's income and spending plan. However, the beneficial effect of phase-in is maintained. |
Revaluation
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Why is Revaluation needed? It has been five years (2003) since the last complete revaluation of all real estate was implemented. Meanwhile, a constantly changing local real estate market has caused inequities to develop not only in general, but by neighborhood and/or individual properties. Some properties increase at a faster rate than others. The solution of this problem is to reappraise all real estate based upon current market values. What kinds of inequities exist now? Changes in value occur in any community over a period of time. Neighborhoods change, and the desirability of some properties change, meaning that some properties have become over-valued or under-valued when compared to similar properties. Revaluation returns all properties to current market values and to the fair-share basis. For example, although market values in general have slowed considerably as of late, this recent downturn has not offset the substantial value gains experienced since October 2003, (the effective date of our last revaluation). Who determines the value of my property? People determine the market through real estate transactions with a willing buyer and a willing seller. It is the responsibility of the Assessor to research and determine fair market value in all areas. The most significant part of the appraisal process is accomplished by gathering sales data occurring from October 2, 2003 to October 2008 and comparing those sales to your property. From a study of sales of similar properties in like neighborhoods, an opinion of fair market value can be ascertained. Isn't Fair Market Value what I paid for my property? Not always. You may have purchased your property years ago when prices and value were considerably different. The true test is what your property would sell for in today’s real estate market. Are my real estate taxes based on my home’s Fair Market Value? No. Connecticut law requires that your taxes be computed on 70% of your home’s Fair Market Value. This is called the Assessed Value. For example if the Fair Market Value of your home is $200,000, your taxes are computed on 70% of that amount, or $140,000.
What is the Mill Rate? A “Mill” is equal to $1.00 for each $1,000 of assessed value. Tax is determined by multiplying the number of Mills in the current tax rate by the assessed value of your property. The Mill Rate for Fiscal Year 2009 in Windsor is 29.3. Do not compute your new taxes by using last year’s mill rate of 29.3 multiplied by your new property assessment. The new mill rate will go down in the coming year.
How is the Mill Rate established? First, the Windsor town staff prepares budgets for the upcoming year that begins on July 1 and estimates of any income that the town expects to receive from fees, investment income and state and federal sources. Those estimates are given to the town council, which may make adjustments in them. Estimated revenues are then subtracted from projected expenses and the result is the amount the town must raise from property taxes to balance its budget. The town then divides that amount by the total value of all Windsor property to establish a Mill Rate. For example: Town operating budget = $95.8 million
Will my taxes go up after revaluation? Based on the revaluation that was conducted between October 1 and December 1, 2008, if your property has increased more in value than other properties in Windsor, your share of taxes will be higher. If your property did not increase in value as much as other properties, your share of taxes will be lower. Your exact tax bill won’t be known until the Town Council sets the Mill Rate for Fiscal Year 2011 and the budget that results is approved by voters at the annual budget referendum in May, 2010.
Do revaluation and the Mill Rate also apply to my motor vehicles?
Are Windsor businesses also affected by revaluation? Yes they are. All Windsor businesses are surveyed to obtain information regarding the value of their building and equipment. They are then taxed at the same Mill Rate as are residents.
How are elderly people on the HEART program affected by revaluation? This program reduces taxes by a certain amount based on income. Any reduction in taxes before revaluation will be the same proportional reduction after revaluation. To be eligible for the HEART program, you or your spouse must have been at least 65 years of age on December 31, 2008, own and occupy your home in Windsor and have a qualifying income not exceeding $30,500 for single people or $37,300 for a married couple. Qualifying income is defined as adjusted gross income for IRS purposes plus Social Security income. Those interested in applying can do so at the Tax Assessor’s office between February 1 and May 15, 2009.
But if my tax bill goes up, won’t the town get a lot of extra money this year? No. This is one of the false impressions of revaluation. As indicated in the chart below, prior to revaluation, residential property represents approximately 65% of the total Grand List and thus is responsible for 65% of the total property taxes. The remaining 35% of the Grand List is made up of commercial & industrial property that would be responsible for the remaining 35% of the total property taxes. After revaluation, as indicated in the second chart below, we project that residential property will increase to approximately 70% of the total Grand List and commercial & industrial property will actually decrease to approximately 30% of the total. Envision the Grand List as being a pie with two slices representing residential and commercial/industrial. Each slice grows or shrinks in proportion to its share of the Grand List. Since residential has historically grown faster, a “shift” occurs, causing the residential share of the pie to become larger. 
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